Financial Questions Remain As Miami County Commissioners Prepare For Friday Vote On Marlins Stadium Deal
Written by Risa Polansky on February 12, 2009
By Risa Polansky
A day away from a vote on a stadium construction project set to cost taxpayers more than $478 million, financing questions remain.
Miami-Dade County and City of Miami commissioners are set to vote Friday on a deal for a ballpark for the Florida Marlins.
Costs to taxpayers include $347.5 million from the county and $13.5 million from the city toward stadium construction, at least $94 million from the city for parking, about $10 million from each government toward infrastructure, up to $3.5 million from the localities toward green certification, and to-be-determined payments on planned debt issuances.
The county is to front $35 million of the team’s $154 million construction contribution, to be repaid annually in rent.
Once the stadium is built, the county would put $750,000 annually into a capital reserve fund for the ballpark. The city would pay $250,000 a year, and the team $750,000 plus some proceeds from stadium events.
Variables come into play on several elements of the deal.
Commissioners may be asked to approve the stadium project without financing structure details, which could come in early March rather than at Friday’s meeting.
The agreements allow any party to walk away before July 1. If they remain in the game after that, the county is on the hook to pay $382.5 million — its contribution plus the $35 million the team is meant to repay — even if it means issuing debt in the future or tapping into general funds.
Outside experts have said parking costs could come in well over the $94 million estimate by City of Miami officials.
The county expects the state to grant sales tax exemptions for construction materials but has not yet gotten the OK — meaning construction costs could rise by up to $4.4 million should the state nix the idea.
The deal specifies the team would pay all overruns the governments don’t cause, and it requires a $20 million line of credit for assurance — but there’s no further security provided for any costs above $20 million.
County Commissioner Sally Heyman has been pressing questions about the deal for months, long before County Manager George Burgess released detailed contracts Jan. 27, she said.
She’s insisted she’ll vote no without the answers, and "as of today I have still not gotten answers," she said Monday. "I still have a lot of structural questions on our liabilities and our obligations."
She "awaits dialogue" with manager Mr. Burgess, who went out of town for more than a week the day after distributing the contracts.
He did not respond to repeated requests from Miami Today for an interview over two weeks.
"I think the concept [of a baseball stadium] is great," Ms. Heyman said. "But the contract has to be fair and it has to be examined and it has to be investigated."
A primary concern: "We’re not dealing with the Florida Marlins; we’re dealing with a bunch of corporations that were created… it’s fragmented. This corporation is in charge of this, this corporation is in charge of this," Ms. Heyman added.
Civic leader Norman Braman, a stadium opponent who is suing the county over the deal, said the same.
"The entities are just paper companies that have no assets supportive of it — no one knows who the shareholders are."
The five agreements that make up the stadium deal don’t indicate the name of the person set to sign on behalf of the team.
The Construction Administration Agreement leaves space for a signature for "Marlins Stadium Developer, LLC."
The Operating Agreement leaves space for a signature for "Marlins Stadium Operator, LLC," as does the City Parking Agreement.
The Non-Relocation Agreement leaves space for a signature for "Double Play Company," the Marlins’ general partner, as does the Assurance Agreement.
Marlins spokesman Peter J. Loyello said in an e-mail that "either [team owner] Jeffrey Loria or [president] David Samson can sign all docs."
In unveiling the documents, manager Mr. Burgess acknowledged "the stadium developer is a shell," which is why the Assurance Agreement pins down the team itself to cover any contract breaches, he said.
It guarantees the county and the city a subordinated security interest in the Marlins franchise to hold the team responsible for the "stadium developer’s" funding obligation, including all cost overruns beyond those deemed to be caused by local government.
Still, Ms. Heyman noted, "we don’t have any idea what the value and assets of the team are."
The deal does not require the Marlins to release financial statements.
"For our manager to tell us "well if this doesn’t work we can sue them’… that’s really problematic for me," Ms. Heyman said.
And "the one thing that really stoked me," she said, is a clause that says "officers, directors, partners, shareholders, members, employees and agents of the team and their affiliates shall not in any way be liable… no deficiency or any other monetary or personal judgment of any kind shall be sought or entered against any of the team personnel…"
Ms. Heyman’s interpretation: "This says you can’t bring a judgment against them" should the Marlins not hold up their end of the agreement."
Assistant County Attorney Geri Keenan said the contract provides that, in the case of a breach, "we sue the entity that we’re contracting with."
The provision "means that there’s no personal liability… the liability is to the corporate entity itself, whatever type of business entity that might be."
If the corporation has no assets, the county would be unable to go after its owner for personal assets. That includes the team and its owner, Mr. Loria.
Ms. Heyman noted that in suing over a breach, if the franchise is the only asset, "you have to go through Major League Baseball to pursue it, and Major League Baseball hasn’t committed to guaranteeing that should there be a problem."
Reactions from commissioners have been mixed since Mr. Burgess distributed the documents.
During the past week and a half, six of 13 commissioners returned calls for comment on the newly unveiled stadium documents.
Rebeca Sosa, who supported a framework stadium deal last year, declined to comment Monday.
Chairman Dennis Moss said Monday in an interview regarding county economic recovery efforts that "if it’s financially feasible to build a baseball stadium, I think it’s something we need to do because it’s an economic stimulus project."
At Friday’s meeting or afterward, commissioners are to consider also several other related items they had yet to see as of late Tuesday, including measures related to issuing debt for the stadium project.
Mr. Burgess lists what he calls forthcoming items in a memo he sent to commissioners late last Friday, promising details before this Friday’s vote.
Attached to the memo are a handful of documents missing from the three-inch binder of stadium contracts he distributed Jan. 27.
Information still to come is to include formal wording for items related to bonding, as well as "further discussion of the strategies we will be proposing to protect the county from potential near-term declines in bed tax receipts," Mr. Burgess wrote.
The county plans to fund most of its share of the $515 million construction budget with convention development taxes, tourist development taxes and professional sports facilities franchise taxes — all tied to local hotel room rentals.
The county collected record convention taxes in July: up 6.2% from the year before.
But, between Sept.15 and Dec. 15, collections dropped 4%.
In addition to the stadium project, down the line, convention development taxes are also tied up in other commitments, including paying off hundreds of millions in outstanding principal on zero coupon bonds.
In his State of the County address Tuesday, Miami-Dade Mayor Carlos Alvarez asked for commissioners’ approval on the stadium deal, assuring them the money’s there.
"In spite of the economy, we have the financial wherewithal to proceed with this project in a timely and cost-effective manner," he said, asserting that "at this time, there is no better use for these tourist dollars than to build a world-class baseball facility that will be the envy of the nation."